StorySpoilers
Read the story (spoilers up to the ending)
1. Kidnapped in Afghanistan
Tony Stark, CEO of Stark Industries, visits Afghanistan to pitch the new Jericho missile to the military. On the way back his convoy is attacked and he is knocked out by an explosion. He wakes up in a cave. Yinsen, a doctor held there too, has put an electromagnet in Tony's chest to keep bomb fragments from reaching his heart.
2. Building a suit in the cave
His captors are the Ten Rings, and Raza, who leads them, orders him to build a Jericho. The cave is full of his own company's weapons, which shocks Tony. Pretending to build the missile, he and Yinsen secretly make a small power source for the magnet, the arc reactor, and an iron suit to escape in, the Mark I.
3. Yinsen's sacrifice and the escape
When the suit isn't ready in time, Yinsen runs out to buy time and is shot. Before he dies he tells Tony not to waste his life. Tony burns the weapons with the suit and blasts into the sky, but crashes in the desert and the suit breaks. His best friend Rhodey's search team finds him wandering.
4. "No more weapons"
Back home, Tony holds a press conference and announces the company will stop making weapons. Obadiah, his father's longtime partner, objects and uses the board to push Tony out. Tony shuts himself in his workshop and, with J.A.R.V.I.S. and the robot arm Dum-E, improves his chest reactor and starts building a new suit.
5. The red-and-gold suit and Gulmira
Test flights in the silver Mark II reveal that it ices up at high altitude, so Tony builds the improved red-and-gold Mark III. At a party, reporter Christine shows him photos of Stark weapons being used in Gulmira, Yinsen's hometown. Tony flies there in the suit, defeats the Ten Rings and saves the villagers.
6. Obadiah was behind it all
At Tony's request, Pepper copies data from the company computers and learns that Obadiah has been selling weapons to terrorists and had hired them to kill Tony. Meanwhile Obadiah takes the remains of the Mark I from the Ten Rings and has Raza's men killed. He then rips the reactor out of Tony's chest and uses it to power his giant suit, Iron Monger.
7. The final battle
Dying without his reactor, Tony is saved by the old one Pepper had kept as a keepsake, handed to him by Dum-E. He races to Pepper and Coulson and fights Iron Monger. Outmatched, he has Pepper overload the large reactor at the factory, and the blast takes Obadiah down.
8. "I am Iron Man"
At the next day's press conference, Tony is supposed to read Coulson's cover story that Iron Man is a bodyguard. Instead he puts the cards down and says, "I am Iron Man."